tv Nightly Business Report PBS May 11, 2015 7:00pm-7:31pm PDT
♪ this is "nightly business report." >> saudi snub. the new king s he won't attend a white house summit as global investors keep a close eye on the u.s./saudi relationships. long connected by oil and security. bold prediction. why opec says we could be in for a decade of cheap oil. and record breaker. will an art auction make history tonight. all that and more this evening on "nightly business report" for monday may 11th. good evening, everyone. and welcome, i'm tyler mathisen sue is on assignment tonight. stocks fell after monday's big rally. more on that in a moment. we begin tonight with hotspots all across the globe. investors are closely watching
developments out of riyhad athens and beijing. three separate stories, all of which could affect the direction of stocks and bonds to come here and overseas and by extension, e value of your portfolio. in saudi arabia the king has said he will not attend the summit of arab states at camp david in the next few weeks. it's a relationship bound not just by politics but by economics. hedley gamble has more from london. >> r for a nuclear agreement just . president obama's bid to bring arab allies on board is flounder dubbed the saudi snub u.s. officials were quick to push back. >> i know that there have been
some speculati that this change in travel plans was an attempt to send the message to the united states. if so that message was not received. >> nothing could be further from the truth there was some snub. >> billed as an opportunity for arab leaders to air their concerns about the p5 plus 1 talks. obama administration had planned to sweetened the agreement with more military operation, but stopping short of what arab leaders were hoping for. >> this has been a slow moving train wreck over several years. the president is trying to reassure at these gulf states if we do reach a deal with iran we have their back from a security standpoint. this is a difficult assurance to provide since we have not delivered very much on other assurances we have provided in the past i think our credibility is really at stake here. >> the move comes just days after u.s. secretary of state john kerry's latest trip to the kingdom, and what u.s. diplomats described as tough negotiations
over the saudi led coalitions in yemen. with no long term or binding security commitment the saudis and their allies are worried. they say the washington summit is not offering anything new. and while both sides deny there's any rift in the relationship there's no getting around that there's a disconnect between what gulf arab allies want and what the u.s. is willing to give. >> the fact remains that the united states can't afford another failed state, which could become a breeding ground for terrorists and at the same time as a u.s. diplomat told me they're committed to securing global shipping lanes, that means gulf oil exports will continue >> the administration made it s not consider the miss meeting a number by the saudi king. john harwood has been watching the developments from washington. how importa is the relationship between the two countries both politically and
economically and is it cooling? >> it's a critical relationship. the moderate arab states are vital allies for the united states. and the oil relationship has over many years, i think this is a strain. i don't think the white house denials were overly persuasive in terms of the idea that a visit that was announced on friday but now on sunday was said not to be taking place -- it indicates a rough patch. now, it's the flip side of what we've experienced with israel. another ally in the region they are uncomfortable with the deal and netanyahu has made that more than clear, that we are trying to reach with eye ran, and the sunni arab states look at shiite iran and worry about a issue with the routes and say, what does that mean for us they're clearly worried, i don't think it's a rupture or anything like that. but it's a matter of strain at the moment. >> it is a matter of question
as to whether iran becomes a regional counter weight to saudi arabia shiite versus sunni. let's move to another topic that's going to be very hot tomorrow. there's likely to be a critical vote tuesday, affecting what some people call the president's biggest legislative item since the affordable care act. namely the trans pacific partnership. this time john the president's foes on this or many of them are in his own party. hap. >> this is an example of what happens with trade bills, we saw it with bill clinton, he had a lot of democratic resistance to nafta, letting china in the organization. and he made agreements with republicans then. they're trying to clear a filibuster in the senate tomorrow to get to consideration of trade promotion authority, which is accelerated what they call used to call fast track,
to let u.s. negotiators to strike a deal. i do expect they will get the 60 votes they need to clear that filibuster and then begin debate on the bill their strong democratic opposition led by elizabeth warren from massachusetts. thanks ve. saudi arabia is the world's biggest crude exporting nation. today a report in the organization of the petroleum exporting countries was leaked and what the group sees for oil prices over the next decade is surprising to say the least. jackie deangelis has >> reporter: a market moving headline from the wall street journal today. opec does not see prices consistently trading at over $100 a barrel in the next decade. opec's latest strategy report is due out tomorrow. in its most optimistic scenario opec sees prices at $26 a barrel
in 2025. the cartel appears to be getting concerned that american producers will continue to pump product and cope. how are traders interpreting this? >> their ov strategy hasn't worked because there's so much oil out there and capacity in the united states and there's alternative energy out there that's coming on line in the next 10 years, their report is a reflection of that. >> u.s. production is still at record levels and opec hasn't made production cuts. does that mean the cartel will slash output at its meeting? that remains to be seen. wti is supported at $59 a barrel and brent at 65. these are crucial levels traders say, they're not just digesting today's headlines, but a plethora of factors right now as they determine which direction this trade will take. for nightly business report i'm jackie deangela. >> oil prices did edge lower
today, after rising for eight straight weeks. west texas intermediate finished the session down. separately the obama administration granted conditional approval for royal dutch shell to drill in the arctic the company has already spent $6 billion on exploration in the region. that's estimated to contain 20% of the world's undiscovered oil and natural gas. the government says drilling activities will be subject to rigorous safety standards. >> china has overtaken the united states as the world's biggest buyer of crude oil. purchases by that country are expected to remain strong despite a slowing economy. according to reuters, china hit a record of 7 1/2 million barrels a day last month, and that puts it ahead of estimated exports for the united states. china is the number one purchaser of other commodities like coal and iron ore.
chirn in a's central back made a big move overnight. that country tries to ratchet up support for its growing economy s efforts are not ex >> reporter: china cut interest rateses for the third time in six months. the economy is slowing down. and many people here believe it's rapidly losing momentum. the april data so far has been disappointing for trade as well as inflation, and that bodes poorly for the other data out later this week as well as the second quarter. the central bank decided to cut interest rates by 25 basis points to help sure up the economy. lenneding rate stands at 5 prnt 1%. the deposit rate is at 2.2%. as much as the central bank would like to sure up the economy, they want to deepen
reforms allowing banks to set their own interest rates on deposits. the idea is to create more competition in thest >> now, to europe where the focus is on greece. the indebted country eased more immediate concerns by making payment a day early to the internl mony fundp the liquidity situation is urgent and further funds are needed. the situation in greece as well as concerns with china's economy wared on the the dow was off 86 points to 18,105. nasdaq was off about 10 and so was the s&p 500. the yield on the ten year was back above two and a quarter percent. quite a move there. the president of the san francisco fed says he's
optimistic about the u.s. economy and expects to see further improvement in the labor market. as for when the central bank will hike rates, the move should not be telegraphed opinion. >> my personal preference is that we don't have the most telegraph edeydependency. should be coming together every six weeks and discussing what the outlook looks like. and what the appropry decisions at that meeting are. >> williams is a voting member of the federal open market committee. citigroup confirmed it could plead guilty to an antitrust charge over the banks dealings in the foreign exchange markets. citi and other big banks have been accused of manipulating the currency market to their own advantage. still ahead, it has been a great year for t relat stocks but there's one group that's lagging, and in need of a
jump start that stor ♪ uber could be worth $50 billion. the ride hailing company is reportedly in discussions to raise roughly 1 $1/2 billion in firnsing. according to the wall street journal, that would value the company at 50 billion or higher possibly making it the most valuable venture backed start-up of all time. as uber disrupts the taxi business, it's also cr a for car rental companies that are reeling from a host of other issues as well. companies like avis and hertz
are both down more than 15% this year. as more americans start making vacation plans, this summer could put the entire car rental industry to the test. >> plan on renting a car this summer plan on a hit or miss experience. >> the last time i rented a car was in las vegas, and the service was not good. >> it's not perfect. few airports are tougher than others. >> rental car companies are trying to reinvent themselves while getting more profit for vehicle. just as travelers want to move through airports faster they also want to spend less time picking up and dropping off rental cars but less time at the rental car counter makes it tougher for these companies to generate bigger profits. >> they want to sell you, they want the insurance, they want you to come out with a bigger car, they want you to get some
prepaid gas. >> hertz, avis and enterprise dominate the industry over the last decade. unlike airlines which now limit seats and charge customers more. rental car companies struggle with too many vehicles spending too many days each month not being rented. meanwhile, ride share apps like uber are cutting into one day rentals and increasingly technology is chan way people travel. r rental car company. >> they probably have ten years or so of rolling out technology maybe five years to make the experience better. >> if the rental car companies are able to transform their businesses much as the airlines have the industry could be in for a long successful run, and that could change the experience for many who are. phil lebeau nightly business report chicago. car rental companies are not the only ones trying to transform their business. the u.s. postal service is doing
the same. independent agency recently reported a net loss of 1 $1/2 billion during the first three mo of year and it has a multibillion dollar plan to get back on track. morgan bre. >> the u.s. postal servi is testing out new mailboxes, big enough to fit packages. >> we do a lot of online shopping probably 90% of my packages can fit in this mailbox, i think that's great. i don't have to worry about someone stealing it. >> the boxes are part of a six month trial and part of a handful of rural and urban markets. >> with the change in mail and how the package business has grown, we decided that there was a need for a box that would actually fix the mail of today. >> this is just one example of the u.s. postal service's
massive multibillion dollar push into package delivery. it's no secret the agency has been struggling for years. including a $1.5 billion net loss in its most recent quarter. the postal services most profitable business has plunged. volumes droppin 30% over the past five years. e commerce has surged package volumes have jumped over the same period. >> packages are continuing to grow exponentially. >> more packages means more capacity. this machine can sort 6,000 parcels an hour. recently installed in an area at this queens facility once dedicated to mail. the u.s. postal service has plans to roll out 20 of these across the country. one of the fastest growing parts is partial select service, which provides delivery for companies like amazon fedex and ups. >> you can see with the result
of ups and fedex, they're growing at a small rate than post offices, re amazon and macys are delivering to the post offices for the last month service. >> other initiatives included a design competition for a bigger more fuel efficient fle also same day delivery in certain areas, including groceries for amazon and california. and while ups and fedex have implemented new pricing initiatives, the ups has been slashing rates for priority mail will it all be enough to put the postal service back on the path to profitability. for nightly business report i'm morgan brennen, in f a $2 billion shale oil merger is where we begin tonight. noble energy will acquire
rosetta resources. the deal gives noble access to two massive texas shale formations shares of noble energy down more than 6% to $46. rosetta surged to $28. shares of zulilly sored today. the investment ads up to more than $50 million in the online children's retailer alibabba was off a fraction. zulilly popped 5% to 1398. lower milk costs helped deem food foods at higher tha mcdonald's is super sizing its turnaround plan a few of the changes the dow plans to
make today there's more. according to dow jones, the chain plans to shake off sliding sales by adding mid priced sandwiches expanding all day breakfast, simplifying its drive through menu boards and selling lemonade in the summer. not only are investors already seeing returns, but the project itself is transforming the neighborhood and the real estate landscape. diana ol >> we met ben miller a year and a half ago in a dicey d.c. neighborhood at the shelf an old building he claimed would make history. today, machetto is open for businesse first ever crowd funded real estate project of floor plans for the future. >> we raised # $50,000 from 75 people at $100 a share. they allow investors to buy
shares in commercial real estate projects. investors get rental streams, property appreciation and they get to be a part of something bigger. >> we start a fund-raiser, why can't everyone be a part of investing and building in the neighborhood. >> gina schaffer who owns 10 area hardware stores but leases all her spaces bought into her project to the tune of $10,000. >> for us it was part of the sharing community. and the move and being able to -- even if it was a piece, to say we owned something. >> this area is still in transition but machetto is a solid anchor. a thriving market that embodies the crowd even in its structure. houses a retail store, a bake bakery and a high end asian fusion restaurant. >> i think when you have the synergy of all these businesses you get that lifestyle brand. >> he saw an opportunity not only to house his coffee
business but to profit from a new model. >> we want to drink a high end coffee folks can understand what fine cuisine can be like it can appreciate fine clothing. >> the vendors literally feed off each other, with retail pulling patrons in for their morning share shares are attractive to the social generation and now crowd funding is ever more attractive to investors. >> we did $150 million of real estate in the last month. and we are doing a project a week to underwrite and fund a project a week. it blew our minds. >> reporter: miller estimates the value of this property alone is up 50 to 100% and machetto has outperformed off productions. the cashflow is just a bonus.
for "nightly business report." i'm diana olick in washington. >> to read more about how crowd funding real estate is paying off, head to our website. coming up the picasso painting up for auction that's expected to ♪ here's what to watch tomorrow. the treasury department releases its budget for april, the biggest tax month on the calendar. we'll have employment data with the jobs opening and labor turnover survey and a new report on small business
optimism is what's on the agenda for tuesday. five companies are sitting on a half trillion overseas apple, microsoft, google pfizer and cisco. financial times signing a report by moodies says america's tax code and mediocre growth around the globe is keeping the cash cows from spending any of their hoard. sothebys earnings estimates, the earnings were helped by stro seams of contemporary art. rival auctioneer christies is hoping to make history when it auctions off a piece by pablo picasso. expectations are very high with some referring to this auction as a sale to remember. robert frank has more on the spring auction season. >> nearly two million worth of
art is expected to sell at sothebys in christies. a growing demand by rich collectors by fine art is expected to keep breaking sales report of the sale is likely to become the most expensive painting ever sold at auction tonight. the piece was one of a series of 15 paintings by picasso, this one is considered one of the greatest picasso masterpieces still in private hands. >> by the 50s when he was starting to create the sweet in 54/55, it was as if he was revisiting his youth, and the works began to become more punchy and angular again. christies has put an estimate of $140 million on the painting meaning it's likely to shatter the current record holder
$142.2 million. >> as an investment they've done better than the stock market. the famed collector bought the entire series of 15 pieces in 1956 for $212,000. version o was sold in 1947 for 48.4 million including auction fees. it's tripled in value, while the s&p 500 has roughly doubled. another piece that's likely to break a record is this sculpture called man pointing. he created the piece during a single night of feverish work in 1947. if it sells for an estimate of $137 million. it will be the most expensiv sculpture ever auc continued rising prices will depend largely on financial markets. >> it will be impossible to do anything but look at these sales and say we have a frothy market at the time.
there's a tremendous of excess capital out there that's bottlenecked in the hands of a relatively small amount of people. and they're going to have to find a place to put those assets. >> more and more of those assets are hanging on investors walls. for nightly business report, i'm robe. >> that's it for nightly business report for this evening, i'm tyler mathisen thanks for watching everybody. have a great evening. we'll see you tomorrow night.